The Structure of Licensing Contracts

Abstract

Industrial organization theory has explored several issues related to licensing, but empirical analyses are extremely rare. We amass a new and detailed dataset on licensing contracts, and use it to present some simple ‘facts’ concerning licensing behavior. Our analysis reveals robust cross‐industries differences in several contractual features, such as exclusivity, cross‐licensing, ex‐ante versus ex‐post technology transfers, and licensing to related versus unrelated parties. We offer an interpretation of these facts based on cross‐industry variation in the strength of intellectual property rights.